History

Sovcombank, initially known as “Buoykombank”, was incorporated in a village of Buoy, Kostroma Region, on 1 November 1990.

In 2002 Sergey and Dmitry Khotimskiy and Mikhail Klyukin acquired 100% shares in “Buoykombank” LLC and renamed it into “Sovcombank” in 2003.

In 2002 – 2003, Sovcombank operated a traditional banking model and occupied a niche of retail banking for pensioners. Traditional banks were reluctant to lend to pensioners because of their generally low income and shorter life expectancy in comparison with those in countries with developed economies as well as specific staff training required in order to serve these clients. However, due to prudent financial behaviour, low but guaranteed by the Russian government income of this customer segment, small loan size and short terms of loans, Sovcombank’s cost of risk was among the lowest in the market while interest rates were on par with the market. Sovcombank gradually expanded its branch network in from a single office in a village of Buoy in 2002 to [34] offices in Kostroma region by the end of 2006.

In September 2007, TBIF Financial Services B.V. (“TBIF”), a financial services company based in the Netherlands, became a 50% shareholder in Sovcombank. As a result of this transaction, Sovcombank became a sole owner of TBIF’s asset in Russia, ARKA Finance, a regional consumer finance provider with a network of 612 mini-offices and 2,010 credit brokers in 140 in Siberia and Far East of Russia.

By the end of 2008, Sovcombank completed operational integration of ARKA Finance into the bank’s infrastructure. The main focus of the Group remained serving pensioners. As at 31 December 2008, Sovcombank’s headcount increased to 1,200 employees. In May 2012, TBIF sold its equity interest in Sovcombank to other Sovcombank shareholders with significant profit.

In March 2009, the Group acquired 99.7% shares in “Regional Credit Bank”, a regional bank specialised in consumer finance in Siberia and Far East of Russia, at a discount price. The acquisition enabled the Group to expand the retail network in an efficient and cost-effective way. Sovcombank team completed operational integration of “Regional Credit Bank” assets in December 2009.

In 2009-2013, the Group focused on improvements in operational efficiency and further development of its federal retail network through organic growth: its foothold increased from 260 towns as at 31 December 2009 to 732 towns as at 31 December 2013, while its headcounts increased from 3,096 to 6,673 employees during this period. Group’s focus remained consistent: enabling for pensioners in Russia access to a financial products and services.

In February 2014, Sovcombank acquired GE Money Bank Russia, a Russian subsidiary of GE Capital International Financing Corporation, which specialised in unsecured consumer lending. As a result, Sovcombank gained access to an advanced technological platform and the first class expertise in risk management and underwriting procedures, human resources and IT. Acquisition of GE Money Bank Russia enabled Sovcombank to build eventually the third largest retail distribution network in Russia after Sberbank and VTB and the leading retail distribution network in Russia among privately owned banks, according to the Group’s estimates based on data disclosed by Russian banks, as at 30 September 2017. The Group completed full operational integration of GE Money by December 2014. As at 31 December 2014, the Group operated in 901 cities, towns and villages and had 7,850 employees.

Following the acquisition of GE Money Bank Russia and taking advantage of its technological platform as a basis, Sovcombank expanded its product range with other mass-market financial products. Today, the range of products sold via mini-offices does not significantly differ from the product range sold through the traditional bank offices.

In 2015, Sovcombank acquired ICICI Bank Eurasia, a subsidiary of ICICI Bank India, at a discount price. Sovcombank renamed ICICI Bank Eurasia into “Sovremenniy Commercheskiy Innovatsionniy Bank” or “SCIB”. In 2015 - 2016, the Group acquired and completed the operational integration of Fintender, SCIB, the underwriting centre in the city of Kazan’ inherited from GE Money Bank and another financial technology company RTS-Tender. These acquisitions and integrations, created an online bank without a branch network that enables 300,000 MSMEs to participate in state procurement throughout Russia. As a result, the Group became the market leader in issuing bank guarantees for procurement in the Russian Federation, according to the Group’s estimates based on information from zakupki.gov.ru, an official Russian Government website, as at 31 December 2017.

In 2015, the Group acquired 9.48% of shares in Rosevrobank. The Group further increased its ownership in Rosevrobank to 19.54% in 2016 and continued to increase its equity interest as described below. The main reasons for the Group’s interest in Rosevrobank was the Group’s belief that Rosevrobank provides premier cash and settlement services to Russian corporate customers, a bargain purchase price and Rosevrobank’s historically high ROE.

In September 2015, the DIA selected Sovcombank in an open tender for the financial rehabilitation of Express Volga Bank, a regional Russian bank based in Samara and active predominantly in Volga region of Russia (see “—Material subsidiaries”). By participating in the financial rehabilitation of Express Volga Bank, Sovcombank simultaneously achieved the following strategic tasks:

increased profit through enhanced operating efficiency resulting from economy of scale and immediate entering into new regions with nearly zero deployment costs;

ensured healthy growth of the consumer loan portfolio at the comfortable level of credit risk; and

diversified its funding through a portfolio of Express Volga Bank’s low-cost deposits and raising RUB 50 billion from the DIA for 10 years at 0.51%.

In October 2016, Sovcombank acquired from Severgroup (a parent company of Severstal, a vertically integrated steel and mining company) Metcombank. Metcombank specialised on auto loans and had the largest car loan portfolio among privately owned banks as at 30 September 2016 according to the Group's estimates based on banki.ru. Sovcombank retained the business team and strengthened its position by rolling out Metcombank’s expertise in auto loans across Sovcombank’s retail network.

In 2016, Sovcombank acquired Garanti Bank – Moscow, a subsidiary of Garanti Bank, Turkey's second largest privately owned bank. This acquisition helped Sovcombank to develop operations with international financial institutions and corporate lending to foreign, in particular – Turkish, companies.

In January 2017, Sovcombank acquired the mortgage loan portfolio of Nordea Bank Russia which comprised a portfolio of predominantly high-quality seasoned mortgage loans. Along with this acquisition, Sovcombank joined a highly skilled team experienced in mortgage lending with best-in-class mortgage lending practices.

On 22 December 2017, Sovcombank completed the acquisition of 5.7% of shares of Rosevrobank from DEG. On 30 January 2018, Sovcombank completed acquisition of 11.0% of shares of Rosevrobank from EBRD.